The World Bank’s latest International Debt Report 2024 has revealed that Pakistan’s total external debt stocks climbed to $130.847 billion by the end of 2023, marking an increase from $127.708 billion at the close of 2022. This data underscores the growing burden of debt on the country’s economy amid rising interest payments and fiscal challenges.
The report highlights that the South Asia region experienced the largest annual increase in interest payments on public and publicly guaranteed (PPG) debt in 2023, soaring by 62% to $12.5 billion. Pakistan stood as the second-highest contributor to these payments, trailing only behind Bangladesh and India, where interest payments surged by over 90% during the same period.
For countries eligible for International Development Association (IDA) support, total interest payments on debt stock hit a record $34.6 billion in 2023, a threefold increase since 2013. Pakistan, alongside Mozambique, Senegal, Kenya, and Dominica, recorded the highest ratios of interest payments to export earnings, with Pakistan’s ratio rising to 13.6%. This sharp increase has further strained the country’s fiscal position.
The report also noted a significant increase in repayments to the International Monetary Fund (IMF) by low- and middle-income countries (LMICs), excluding Argentina. Repurchases more than doubled in 2023 to $12.2 billion, with Pakistan, Egypt, and Ukraine leading the list of top payers. These repayments outpaced new IMF lending, which grew by 12.9% to $14.8 billion in 2023, reflecting a shift from pandemic-era extraordinary financial support.
Pakistan also ranked among the top five LMIC recipients of personal remittances in 2023, receiving $26.6 billion. India led the group with $119.5 billion, followed by Mexico, the Philippines, and China.
Breaking down Pakistan’s debt composition, the total external debt stocks included $11.532 billion in IMF credit and Special Drawing Rights (SDR) allocations, slightly up from $11.522 billion in 2022. Long-term external debt accounted for $110.437 billion in 2023, compared to $107.418 billion in 2022. Public and publicly guaranteed debt formed a significant portion, with multilateral creditors like the World Bank (18%), the Asian Development Bank (15%), and other multilateral sources (13%) comprising 46% of the debt. Bilateral creditors, including China (22%) and Saudi Arabia (7%), accounted for 45%, while private creditors, including bondholders, represented 9%.
Short-term external debt also rose marginally to $8.878 billion in 2023 from $8.768 billion in 2022. Key metrics such as external debt stocks as a percentage of exports increased to 352.4% in 2023 from 322.1% in 2022, while external debt stocks relative to gross national income (GNI) climbed to 39.3% from 34.6%.
The report also observed that Pakistan’s debt service as a percentage of exports rose to 43.1% in 2023 from 42% in 2022. In contrast, GNI declined to $332.6 billion in 2023 from $369.5 billion in 2022. Among long-term external debt stocks, public and publicly guaranteed debt rose to $92.99 billion in 2023, while commercial bank loans and other financial instruments dropped sharply to $440 million from $2.096 billion in 2022.
These figures underscore the growing challenges Pakistan faces in managing its external debt amid fluctuating economic indicators and rising global financial obligations.